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CIRCULAR No

CIRCULAR No. 41/2002/TT-BTC OF MAY 3, 2002 GUIDING THE IMPLEMENTATION OF THE TAX POLICY TOWARDS PROGRAMS AND PROJECTS FUNDED BY OFFICIAL DEVELOPMENT ASSISTANCE (ODA)

Pursuant to the current tax laws and ordinances of the Socialist Republic of Vietnam and the Government�s decrees guiding the implementation thereof;

Pursuant to the provisions of Article 28 of the Regulation on the management and use of official development assistance, issued together with the Government�s Decree No. 17/2001/ND-CP of May 4, 2001;

Pursuant to the Government�s Decree No. 178/CP of October 28, 1994 defining the tasks, powers and organizational structure of the Ministry of Finance;

The Ministry of Finance hereby guides the implementation of the tax policy towards programs and projects funded by official development assistance as follows:

I. GENERAL PROVISIONS

1. The programs and projects funded by official development assistance (hereinafter collectively referred to as ODA projects), already approved by competent authorities, shall fulfill tax obligations prescribed in legal documents on tax under the guidance in Section II of this Circular.

2. Interests on ODA loans payable to the donors under the international agreements on ODA shall not be subject to enterprise income tax prescribed in the Enterprise Income Tax Law.

3. Where international agreements (including those on ODA) which the Vietnamese Government has signed or acceded to contain tax provisions related to the implementation of a specific ODA project and such tax provisions differ from the guidance in this Circular, the application of the tax policy towards that ODA project shall comply with the concluded international agreements.

In the process of drafting and negotiating framework international agreements on ODA or specific international agreements on ODA, which contain tax provisions contrary to the current provisions, the Ministry of Planning and Investment or the agencies in charge of negotiations must solicit written opinions of the Ministry of Finance before submitting them to the Prime Minister for approval and signing with the donors.

4. Where documents related to the application of the tax policy to ODA projects mentioned in this Circular are amended, supplemented or replaced, the application of the tax policy to ODA projects shall comply with the amended, supplemented or replacing documents.

5. The terms defined in Article 5 of the Regulation on the management and use of official development assistance, issued together with Decree No. 17/2001/ND-CP, which are used in this Circular, shall have the same meanings as defined in Article 5 of the said Regulation. Besides, in this Circular, the following terms are construed as follows:

- "Principal contractor" is a foreign or Vietnamese organization or individual directly signing a contract with the ODA project owner for project construction and installation or provision of goods and/or services for the ODA project.

- "Foreign contractor" is a foreign organization or individual doing business in Vietnam not in any investment form under the Law on Foreign Investment in Vietnam, and signing a contract with the ODA project owner for project construction and installation or provision of goods and/or services for the ODA project.

- "Foreign sub-contractor" is a foreign organization or individual doing business in Vietnam not in any investment form under the Law on Foreign Investment in Vietnam, and signing a contract with the principal contractor for performing a portion of the job under the contract signed between the principal contractor and the ODA project owner.

II. APPLICABLE TAXES

I. Import tax:

The ODA project owners importing goods subject to import tax for executing ODA projects must pay import tax under the provisions of the Export Tax and Import Tax Law, the Law amending and supplementing a number of articles of the Export Tax and Import Tax Law, the Government�s Decree No. 54/CP of August 28, 1993 and Decree No. 94/1998/ND-CP of November 17, 1998 detailing the implementation of the Export Tax and Import Tax Law and the Law amending and supplementing a number of articles of the Export Tax and Import Tax Law, the Finance Ministry�s Circular No. 172/1998/TT-BTC of December 22, 1998 guiding the implementation of Decree No. 54/CP of August 28, 1993, Decree No. 94/1998/ND-CP of November 17, 1998 (mentioned above), and current guiding documents, except for cases of import tax exemption stated in Section III of this Circular.

2. Special consumption tax:

The ODA project owners importing goods and/or buying goods and/or services subject to special consumption tax for executing ODA projects must pay special consumption tax under the Special Consumption Tax Law, the Government�s Decree No. 84/1998/ND-CP of October 12, 1998 detailing the implementation of the Special Consumption Tax Law, the Finance Ministry�s Circular No. 168/1998/TT-BTC of December 21, 1998 guiding the implementation of Decree No. 84/1998/ND-CP, and current guiding documents, except for cases of special consumption tax exemption stated in Section III of this Circular.

3. Value-added tax:

The ODA project owners importing goods or buying goods and/or services subject to value-added tax for executing ODA projects must pay value-added tax under the Value-Added Tax Law, the Government�s Decree No. 79/2000/ND-CP of December 29, 2000 detailing the implementation of the Value-Added Tax Law, the Finance Ministry�s Circular No. 122/2000/TT-BTC of December 29, 2000 guiding the implementation of Decree No. 79/2000/ND-CP, and current guiding documents, except for cases of value-added tax preferences stated in Section III of this Circular.

4. Income tax on high-income earners:

Vietnamese and foreign individuals working for the ODA project management boards, working for foreign principal contractors or sub-contractors to carry out project construction and installation, providing goods and/or services for ODA projects, shall pay personal income tax under the provisions of May 19, 2001 Ordinance No. 35/2001/PL-UBTVQH10 on Income Tax on High-Income Earners, the Government�s Decree No. 78/2001/ND-CP of October 23, 2001 detailing the implementation of the Ordinance on Income Tax on High Income Earners, the Finance Ministry�s Circular No. 05/2002/TT-BTC of January 17, 2002 guiding the implementation of Decree No. 78/2001/ND-CP, and current guiding documents, except of cases of enjoying personal income tax preferences stated in Section III of this Circular.

5. Taxes on foreign principal contractors and foreign sub-contractors undertaking project construction and installation, providing goods and/or services for ODA projects:

The foreign principal contractors or foreign sub-contractors shall fulfill their tax obligations as guided in the Finance Ministry�s Circular No. 169/1998/TT-BTC of December 22, 1998 guiding the tax regime applicable to foreign organizations and individuals doing business in Vietnam not in any investment form under the Law on Foreign Investment in Vietnam and the Finance Ministry�s Circular No. 95/1999/TT-BTC of August 6, 1999 amending and supplementing Circular No. 169/1998/TT-BTC.

III. TAX PREFERENCES FOR ODA PROJECTS

1. For non-refundable ODA projects:

1.1. Import tax, value-added tax (VAT), special consumption tax on imported goods:

The non-refundable ODA project owners directly importing, or entrusting the import of goods shall be exempt from paying import tax, including price differences (or surcharges) on a number of goods items (if any) and not have to pay value-added tax, special consumption tax (if any) according to the Export Tax and Import Tax Law, the Value-Added Tax Law, the Special Consumption Tax Law, and current guiding documents on imported goods for executing non-refundable ODA projects. The dossiers to be presented to the customs offices in the places where the goods are imported consist of:

- The project owner�s written request;

- The competent authority�s decision approving the non-refundable ODA project (a copy stamped and signed for certification by a competent person of the project owner). Where the goods are imported many times; the presentation of this decision shall be required for the first importation only;

- The Finance Ministry�s written certification of the non-refundable aid goods;

- The contract on the import or entrusted import of goods, clearly stating that the goods are imported with non-refundable ODA (a copy stamped and signed for certification by a competent person of the project owner). Where the goods are imported many times, the presentation of this document shall be required only for the first importation;

- The goods import or export declaration.

The General Department of Customs shall organize the exemption from import tax and non-calculation of value-added tax, special consumption tax (if any) on the goods imported for carrying out non-refundable ODA projects.

1.2. Value-added tax on goods and/or services bought in Vietnam:

The non-refundable ODA project owners shall be refunded the valued added tax amounts they already paid when directly buying goods and/or services subject to VAT in Vietnam for executing non-refundable ODA projects under the guidance at Point 3, Section IV of this Circular.

The principal contractors (regardless of whether they pay VAT by the deduction method or direct method), when undertaking construction and installation or providing goods and/or services for non-refundable ODA project owners, shall not have to calculate the output value-added tax and shall be refunded the input value-added tax they already paid when buying goods and/or services used for project construction and installation or production of or trading in goods and/or services supplied to non-refundable ODA project owners under the guidance at Point 3, Section IV of this Circular.

The non-refundable ODA project owners may buy cars from duty-free shops within the quotas issued by the Ministry of Planning and Investment for use for their projects and shall not have to pay import tax, value-added tax and special consumption tax (if any) thereon.

2. For concessional ODA loan projects:

2.1. Import tax:

Where the concessional ODA loan project owners make investment in the fields, branches, trades and localities eligible for investment incentives under the Domestic Investment Promotion Law, they shall be exempt from import tax on the following goods items, which have not yet been made in the country or have been made in the country but fail to meet the quality requirements, as prescribed in the Government�s Decree No. 51/1999/ND-CP of July 8, 1999 detailing the implementation of the Domestic Investment Promotion Law, and documents guiding the implementation thereof:

- Equipment, machinery, special-use transport means (included in technological chains), which are imported for formation of fixed assets of the enterprises or for investment extension and/or technological renewal;

- Special-use transport means for carrying workers to and from workplaces.

2.2. Value added tax (VAT):

2.2.1. The concessional ODA loan project owners shall not have to pay VAT on goods and services imported or bought in the Vietnamese market, which are not subject to VAT as prescribed in Article 4 of the Value-Added Tax Law, Article 4 of the Government�s Decree No. 79/2000/ND-CP of December 29, 2000 detailing the implementation of the Value-Added Tax Law, and guided in Section II, Part A of the Finance Ministry�s Circular No. 122/2000/TT-BTC of December 29, 2000 guiding the implementation of Decree No. 79/2000/ND-CP, and current guiding documents.

2.2.2. The owners of the projects funded by concessional ODA loans wholly allocated from the State budget or the owners of projects funded by ODA partly allocated and partly re-lent from the State budget, all already approved before May 29, 2001 (the date Decree No. 17/2001/ND-CP took effect), shall be refunded the VAT amounts they already paid when buying VAT-liable goods and/or services for executing out ODA projects, as guided at Point 3, Section IV of this Circular.

Where the ODA project owners assign contracts to principal contractors (regardless of whether these principal contractors pay VAT by the deduction or direct method) for undertaking construction and installation, providing goods and/or services for ODA projects at the prices without VAT, the principal contractors shall not calculate output VAT when billing payment invoices for the project owners, and shall be refunded the input VAT amounts they already paid on the services and goods bought in for project construction and installation or production of VAT-liable goods and/or services which are supplied under the contracts signed with the ODA project owners, as guided at Point 3, Section IV of this Circular.

2.2.3. The ODA projects funded by concessional loans re-lent from the State budget and those funded by concessional loans partly allocated and partly re-lent from the State budget, all already approved as from May 29, 2001 and afterwards (the date Decree No. 17/2001/ND-CP took effect), shall declare and pay VAT or be refunded VAT as prescribed in the VAT Law and current guiding documents.

2.3. Mutual ceasing of import tax, value-added tax and special consumption tax on imported goods:

The owners of projects funded by concessional ODA loans shall be allocated by the authorities competent to approve their projects the reciprocal capital for paying import tax, value-added tax and special consumption tax in the form of mutual ceasing for the goods the project owners have directly imported or entrusted their import for carrying out ODA projects, compile dossiers of request for mutual ceasing, then send them to the Ministry of Finance. The dossier of request for mutual ceasing shall consist of:

- The project owner�s written request, clearly stating the quantity and value of the imported goods, import tax, special consumption tax and value added tax amounts requested for mutual ceasing; For the first-time request for mutual ceasing, the project-managing agency�s written request for mutual ceasing shall be additionally required.

- The competent authority�s ODA project-approving decision (a copy stamped and signed for certification by a competent person of the project owner). In cases where the mutual ceasing must be effected many times, the presentation of this decision shall be required for the first time only;

- The competent authority�s written permission of the mutual ceasing of import tax, special consumption tax and value-added tax on the imported goods of the project (a cope stamped and signed for certification by a competent person of the project owner). In cases where the mutual ceasing must be effected many times, the presentation of this document shall be required for the first time only;

- The contract for importing, or entrusting the import of, goods (a copy stamped and signed for certification by a competent person of the project owner). In cases where the mutual ceasing must be effected many times, the presentation of this document shall be required for the first time only;

- The goods import or export declaration (a copy stamped and signed for certification by a competent person of the project owner);

- The customs office�s tax payment notice.

Within 3 working days after receiving the customs offices� tax notices, the project owners must send the above-said dossiers to the finance offices managing the allocation of capital to the projects. Within 10 working days after receiving the complete dossiers, the finance offices in charge of the allocation of capital to the projects shall carry out the mutual ceasing procedures. Where a dossier is incomplete, within 3 working days, the finance office in charge of the allocation of capital to the project shall notify in writing the project owner thereof for dossier supplementation.

On the basis of the mutual ceasing vouchers of the Ministry of Finance, the local Finance and Pricing Services shall conduct cost-accounting to the local budget revenues additionally allocated from the central budget, and record as an expenditure the investment capital allocated to the project according to current regulations.

Mutual ceasing of budgetary resources shall not apply to fines paid for violations related to tax declaration and payment.

The project owners shall have to apply cost-accounting to tax amounts allowed for mutual ceasing strictly according to current regulations.

The water supply projects funded by concessional ODA loans re-lent from the State budget shall apply mutual ceasing of budgetary resources to import tax and value-added tax as guided in the Finance Ministry�s Circular No. 28/2001/TT-BTC of May 3, 2001.

3. Retrospective payment of tax:

3.1. The Trade Ministry�s permission must be obtained before the goods imported or bought at duty-free shops for carrying out ODA projects and exempt from import tax and special consumption tax as stated at Points 1.1 and 2.1, Section III, of this Circular, can be used for purposes other than those for which they are exempt from import tax and special consumption tax or be sold in the Vietnamese market. The project owners shall then have to retrospectively pay the import tax and special consumption tax amounts already exempted.

The dossiers and procedures for retrospective payment of import tax and special consumption tax shall comply with the guidance in the Finance Ministry�s Circular No. 172/1998/TT-BTC of December 22, 1998 guiding the implementation of the Government�s Decree No. 54/CP of August 28, 1993 and Decree No. 94/1998/ND-CP of November 17, 1998 detailing the implementation of the Export Tax and Import Tax Law and the Law amending and supplementing the Export Tax and Import Tax Law and the guidance in the Finance Ministry�s Circular No. 168/1998/TT-BTC of December 21, 1998 guiding the implementation of the Government�s Decree No. 84/1998/ND-CP of October 12, 1998 detailing the implementation of the Special Consumption Tax Law.

3.2. For the VAT-liable goods which are imported for executing ODA projects and, therefore, the project owners do not have to pay VAT thereon, or VAT-liable goods which are imported or bought in the Vietnamese market and the project owners have been refunded the VAT previously paid thereon, if they are sold in the Vietnamese market, VAT and other taxes must be paid according to current regulations.

Particularly for ODA projects with their owners being non-business State management agencies, political organizations, socio-political organizations, if they have any goods sold in the Vietnamese market, the project owners shall request the tax offices to provide them with odd invoices for issuance to the buyers, then send copy 3 of each invoice to the tax offices for monitoring the use of these invoices on which the goods value, the VAT rate and amount must be fully inscribed. The project owners shall declare and pay tax according to current regulations. When selling goods for the purpose of property liquidation, they must obtain property sale decisions as guided in the Finance Ministry�s Circular No 17/1999/TT-BTC of February 5, 1999, and request the tax offices to provide them with single invoices for issuance to the buyers, and also send copy 3 of each invoice to the tax offices for monitoring the use of these invoices on which the VAT rate and amount shall not be inscribed. The project owners shall have to pay all related tax, except VAT, when liquidating property.

4. Exemption of taxes and charges for foreign specialists working for ODA projects:

For foreign individuals who possess the Planning and Investment Ministry�s written certifications that they are foreign specialists executing ODA programs or projects and eligible for tax and charge preferences as prescribed in the Regulation on Foreign Specialists, issued together with the Prime Minister�s Decision No. 211/1998/QD-TTg of October 31, 1998, they shall be exempt from import tax, special consumption tax, VAT, registration fee and personal income tax as guided in the Finance Ministry�s Circular No. 52/2000/TT-BTC of June 5, 2000 guiding the exemption of taxes and fees for foreign specialists executing ODA programs and projects.

5. Import tax, export tax, and value-added tax on machinery, equipment and transport means imported by foreign contractors by the mode of temporary import for re-export in service of ODA project construction:

Machinery, equipment and transport means imported by principal contractors and sub-contractors by the mode of temporary import for re-export in service of ODA project construction shall be exempt from import tax, not subject to value added tax during the time of being used for ODA project construction, and exempt from export tax when they are re-exported.

The dossiers to be presented to the customs offices in the localities where machinery, equipment and transport means are imported consist of:

- The contractor�s written request;

- The contract for project construction, already signed with the ODA project owner (a copy stamped and signed for certification by a competent person of the contractor). Where machinery and equipment are imported many times, the presentation of this document shall be required for the first importation only;

- A list of machinery, equipment and transport means needed for the ODA project construction, certified by the project owner, clearly stating that the contractor imports them in service of the ODA-funded project construction;

- The Trade Ministry�s written permission for temporary import for re-export;

- The goods import or export declaration.

The foreign principal contractors and sub-contractors must re-export machinery, equipment and transport means upon completion of construction; if they wish to sell them in the Vietnamese market, they must seek the Trade Ministry�s permission, and pay import tax, value-added tax, special consumption tax (if any) and other taxes according to the current tax legislation.

The General Department of Customs shall organize the exemption of import tax and non-calculation of value-added tax on machinery, equipment and transport means temporarily imported by the foreign contractors in service of project construction, and the exemption of export tax upon their re-export.

Particularly for under-24 seat automobiles and vehicles designed to carry both passengers and cargoes, equivalent to under 24-seat automobiles, the mode of temporary import for re-export shall not apply. The foreign contractors that wish to import these kinds of vehicles into Vietnam for use must pay import tax and special consumption tax according to law provisions. Upon completing the project construction they must re-export the imported vehicles and be refunded the paid import tax and special consumption tax. The amount of refunded tax and tax refunding procedures shall comply with the Finance Ministry�s Circular No. 172/1998/TT-BTC of December 22, 1998 and Circular No. 168/1998/TT-BTC of December 21, 1998.

IV. IMPLEMENTATION ORGANIZATION

1. Provision of documents in service of the management of ODA project-related taxes:

In the course of executing ODA projects, when sending periodical reports (monthly, quarterly, annual and wrap-up reports) as guided in the Planning and Investment Ministry�s Circular No. 06/2001/TT-BKH of September 20, 2001 guiding the implementation of the Regulation on the management and use of official development assistance , the project management boards shall also send their copies to the tax offices in the localities where the projects� executive offices are based, and the tax offices in the localities where the ODA projects� constructions are underway (for cases where the ODA project�s constructions and its executive office are located in different localities).

Within 10 working days after signing the construction and installation and/or goods and service provision contracts with the principal contractors, the project owners must send one copy of such contract (stamped and signed for certification by a competent person of the project owner) to the tax offices in the localities where the projects� executive offices and the tax offices in the localities where the ODA projects� constructions are underway (for cases where the ODA project�s constructions and its executive office are located in different localities).

2. Determination of the ODA-providing forms and the applicable tax policy:

The bases for application of the tax policy and for VAT refunding as guided in this Circular are the competent authorities� ODA project-approving decisions and the guidance on the ODA-providing forms at Point 1.2, Section I of the Planning and Investment Ministry�s Circular No. 06/2001/TT-BKH of September 20, 2001. For cases where the investment decisions do not specify whether the ODA-providing form is non-refundable ODA or concessional ODA loans wholly allocated from the State budget, the project owners or the principal contractors shall have to supplement the documents of the investment decision-issuing agencies determining clearly the ODA-providing forms of the projects. Particularly for the projects in which investment is decided by the Prime Minister, the Ministry of Planning and Investment shall certify the projects� ODA-providing forms.

Where the projects using concessional ODA loans part of which is non-refundable ODA financed under separate documents signed with the donors, the tax policy shall apply separately to each project component under each document on the project�s ODA-providing form.

3. VAT refunding for non-refundable-ODA projects and concessional ODA loan projects eligible for VAT refunding:

3.1. Procedures for registration and granting of tax codes:

- For the principal contractors:

The domestic principal contractors shall use the granted tax codes for transactions and carrying out VAT-refunding procedures or request the tax offices to grant tax codes to their subsidiaries for transactions and VAT refunding for activities of construction and installation as well as provision of goods and/or services for ODA projects.

The foreign principal contractors that are doing business in Vietnam and have been granted tax codes, may use these tax codes for carrying out the tax- refunding procedures. Where they have been granted tax codes but do business in Vietnam under many contracts, they shall request the tax offices to grant tax codes to their subsidiaries for use in dealings and VAT refunding for activities of construction and installation as well as provision of goods and/or service for ODA projects.

The foreign contractors that come to do business for the first time in Vietnam or are doing business in Vietnam but have not yet been granted tax codes (those that are declaring and paying taxes through Vietnamese organizations and individuals by the tax deduction mode) must compile dossiers and send them to the tax offices in the localities where their executive offices are based (for contractors that have opened executive offices) or the tax offices in the localities where the project constructions are to be undertaken, according to form 04-DK-TCT, issued together with the Finance Ministry�s Circular No. 79/1998/TT-BTC of June 12, 1998, so as to be granted tax codes.

Where the principal contractors are partnerships of many parties with each performing separate jobs and issuing own invoices for its earned turnover, the tax offices shall grant tax codes to each partnership member (if they have not yet been granted tax codes). Where the partnerships are set up under income-distribution contracts, the tax offices shall grant tax codes to the parties responsible for cost-accounting the general business results of the partnerships (if they have not yet been granted tax codes), for VAT refunding. Where the partnerships are set up under turnover-distribution contracts, the tax offices shall grant tax codes to the parties responsible for issuing invoices to the project owners for VAT refunding. Where the partnership parties set up executive boards, these executive boards shall apply book-keeping accounting, open bank accounts and be responsible for issuing invoices and accepting payments from the project owners, the tax offices shall grant tax codes to the projects� executive boards for VAT refunding. The partnership parties shall issue VAT invoices when receiving payments from the partnerships� executive boards.

- For the project owners:

The project owners that have registered their tax codes shall use them for transactions and carrying out the VAT refunding procedures. For the newly-set up project owners, within 10 days after receiving the investment decisions of the competent authorities, they shall compile dossiers of registration of tax codes with the tax offices in the localities where the project�s executive offices are located as guided in the Finance Ministry�s Circular No. 79/1998/TT-BTC of June 12, 1998.

Where the project owners have registered their tax codes but authorized certain units (project management boards) to manage and separately account input VAT amounts arising in the process of project investment with ODA, the tax offices shall grant tax codes applicable to subsidiaries to the units authorized by the project owners.

3.2. Value-added tax refunding dossiers:

The dossiers and procedures for VAT refunding shall comply with the guidance at Point 3, Section II, Part D of the Finance Ministry�s Circular No. 122/2000/TT-BTC of December 29, 2000 guiding the implementation of the Government�s Decree No. 79/2000/ND-CP of December 29, 2000 detailing the implementation of the VAT Law. The responsibilities of the subjects eligible for VAT refunding, the competence and procedures for VAT refunding shall comply with the guidance in Section III, Section IV, Part D of the Finance Ministry�s Circular No. 122/2000/TT-BTC of December 29, 2000.

3.3. Places for value-added tax refunding:

- For the project owners: At the Tax Departments of the provinces or centrally-run cities where the projects� executive offices are located.

- For the principal contractors: At the Tax Departments of the provinces or centrally-run cities where the principal contractors� executive offices are located (for those having opened executive offices), or the Tax Departments in the places where the project construction and installation are underway.

3.4. VAT-refunding process:

- The project owners and principal contractors eligible for VAT refunding shall compile dossiers of application for VAT refunding immediately after receiving payment invoices, for cases where payment is made periodically and the interval between payments is over one month, or compile dossiers for periodical tax refunding at least once a month but the interval between periodical payments shall not be less than 10 days according to schedule (the project owners or principal contractors must register in advance with the tax offices the schedule for submission of tax refunding dossiers). Within 3 working days after receiving the complete dossiers of application for tax refunding, the tax offices shall examine them and issue value-added tax refunding decisions. Where such a dossier needs to be added, within 3 working days the tax offices must issue written notices thereon to the project owners or principal contractors.

- For the projects using concessional ODA loans granted from the State budget and eligible for VAT refunding: If the tax is refunded to the principal contractors, their tax-refunding dossiers must be certified by the project owners of the to be-refunded VAT amounts before being sent to the tax offices. Where the contractors also declare input VAT amounts not used for ODA-funded constructions or for the production or trading of VAT-liable goods and services, for supply to ODA projects, the project owners must give their opinions right in the tax- refunding dossiers so as to accurately determine the to be-refunded VAT amounts.

- The tax offices shall not refund tax to those project owners that directly import VAT-liable goods but the VAT amounts payable at the import stage have been mutually ceased.

- When issuing tax-refunding decisions, apart from voucher copies circulated as guided in form No. 14/GTGT "Value-added tax-refunding decision", issued together with the Finance Ministry�s Circular No. 122/2000/TT-BTC of December 29, 2000, the tax offices shall send also one copy to the project owners. Particularly for projects using concessional ODA loans allocated from the State budget and eligible for VAT refunding, apart from the above copies, the tax offices shall send one copy to the Ministry of Finance (the Investment Department) for carrying out the procedures for recording an increase in investment capital as guided in the Finance Ministry�s Circular No. 42/2001/TT-BTC of June 12, 2001, guiding the management and accounting of refunded VAT amounts at the ODA projects.

- Where the project owners are allocated from the budget the reciprocal capital for paying VAT, they must repay the refunded VAT amounts to the State budget as guided in the Finance Ministry�s Circular No. 42/2001/TT-BTC of June 12, 2001, guiding the management and accounting of refunded VAT amounts at the ODA projects.

- After refunding VAT, if detecting any doubtful cases which need to be examined and inspected, the tax offices shall issue examination and inspection decisions. The examination, inspection, and handling of violations related to value-added tax refunding shall comply with current regulations.

4. This Circular takes effect 15 days after its singing. All the previous guidances of the Ministry of Finance on taxes applicable to ODA projects, which are contrary to the guidance herein, shall be hereby annulled.

For the Finance Minister

Vice Minister
VU VAN NINH